Toyota Motor Corp.’s new class of shares are being sought in abundance by the Japanese retail investors, signaling the world’s largest automaker will fetch a good price for them and secure numerous long-term investors.

Nomura Securities Co., tasked to retail the shares, has booked ten times more applications than available shares through the retail-only issue, according to a couple of persons at Japan’s biggest brokerage house who have knowledge of total customer orders. “There are customers who closed their bank time deposits and applied for Toyota shares,” said one of the sources, who declined to be named as they were not allowed to speak publicly about the issue. Nomura, according to another official, also had accounts opened with the brokerage jump 80 percent above the usual level seen before the Toyota share sale. Investors are mulling the new, unlisted Toyota “Model AA” shares, as the issue will deliver an annual dividend of at least 0.5 percent, gradually surging to 2.5 percent during its five-year run. And that compares to the regular five-year retail Japanese government bonds and time deposits at major banks of 0.05 percent or lower returns.

The investors are forced to hold the titles for five years, and they can convert them afterwards into common shares or Toyota will buy them back at the price of issue. Nomura has opted to limit the retail sale to no more than 50,000 shares per investor, but as the strong interest continues to gather, most likely not all interested parties will be able to participate in the sale. Toyota’s limit is of up to 500 billion yen ($4 billion) of Model AA shares.

Via Automotive News


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